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The bid orchestration and competitions in scoring procurement auctions

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  • Zhe Chen

Abstract

In this paper, we focus on the issue of bid orchestration in scoring procurement auctions, which is realized by a supplier, who receives preferential evaluation of the respective bid in exchange of a bribe to the auctioneer. For first‐score and second‐score auctions, with an honest (noncorrupted) and a dishonest (corrupted) supplier, we investigate the equilibrium bidding strategy and find that an asymmetry between the two bidders is created by the presence of quality manipulation. We also explore how bidding is affected compared with the symmetric case where both opponents are honest. Our main findings indicate that both bidders (honest and dishonest) find the first‐score auction more profitable compared with the second‐score auction format. Contrary to the symmetric case, the asymmetry of quality manipulation differentiates the utility of the buyer and translates to a preference of the buyer for a second‐score auction. Finally, we also provide some discussions on policy implications of our results.

Suggested Citation

  • Zhe Chen, 2021. "The bid orchestration and competitions in scoring procurement auctions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1718-1729, October.
    • Handle: RePEc:wly:mgtdec:v:42:y:2021:i:7:p:1718-1729
    DOI: 10.1002/mde.3339
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    References listed on IDEAS

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